Tesla In The Tank

In “Electric Vehicles: The Promise of Tesla (Motors),”In July of 2015, I wrote about the unfulfilled promise of enhanced usability of Tesla’s products. That article focused on a test of a Tesla Model S and it’s much-vaunted long, all-electric range, fed by so-called “Supercharger” stations, of which there are few, and confined to just a few regions. As one might expect, the test results were not pleasing to Tesla’s PR department.

The Car And Driver article that formed the basis for my article also focused on some interesting realities, such as several “Superchargers” being powered by diesel generators. Hey, that electricity has to come from somewhere. The Mighty Thor isn’t always around to provide it.

Car and Driver wrote:

Did the trip suck? Not necessarily, but range anxiety mixed with frustration over the Tesla’s lousy navigation skills left a taste in this driver’s mouth not unlike what you might get after licking an alkaline battery. The Model S is the best worst car for a road trip, with a highway behavior that’s equal parts German luxury sedan and GE locomotive, not to mention a supremely comfortable driver’s seat that left nary a sore spot or a numb butt cheek, but limited range. The travel itself was grand. The execution of that travel didn’t go nearly as smoothly as it was supposed to. Some choice words were uttered, both about the car and the miserable environs some of the Superchargers occupied, and after leaving Supercharger number eight, standing near the humming transformer began to feel unsettling. As our comfort with the Tesla’s ability to faithfully travel more than 200 miles on a charge grows, and perhaps if Tesla updates its nav system and beams it to our car as it does with running software updates, we’re hopeful that long trips like this one won’t include as much man-versus-machine stress fighting and mental calculation.

To which I replied:

Keep in mind that for most of America, there are no Tesla charging stations, which are proprietary. One can’t just pull a Tesla up to a generic charging station–which also mostly don’t exist and never will–for a charging that takes many times that of filling a car with gas.

And all this for only $140,000 dollars [the MSRP of a Tesla Model S]. If I bought one, I’d have to live in it.

The general conclusion: Teslas are very well made cars that are comfortable, handle well, and while having greater range than a Chevy Volt, are still not competitive with conventionally powered vehicles, many examples of which one can obtain, very well equipped, for more than $100,000 dollars less than a Model S.

Tesla’s showing all the signs of a company in trouble: bleeding cash, securitized assets, and mounting inventory. It’s the trifecta of doom for any automaker, and anyone paying attention probably saw this coming a mile away. Like most big puzzles, the company’s woes don’t have just one source.

It’s true that the world may be running light on buyers who will spring for a big-dollar electric vehicle that can’t make the hike from Detroit to Chicago without stopping for a long charge. And cheap gasoline isn’t helping Tesla’s case. Right now, prices around the country are hovering close to $2 a gallon. If that’s bad news for the Prius and the Volt, it’s worse for the Model S.

Most Americans haven’t been willing to spend more than $40,000 on a Chevy Volt, and while past articles in the EV archive have noted that EV owners are in the top 7% of wage earners in America, surely the potential market for a $140,000 EV that can only recharge at Tesla charging stations is smaller yet. Generic charging stations are few and far between, and there are far, far fewer Tesla stations.

Stockholders may be clinging to the hope that the company’s upcoming crossover will help put Tesla back on track, but there’s little evidence to bolster that optimism. A big, expensive vehicle with a compromised structure to accommodate gullwing doors can hardly be a sales knockout.

The idea that an all-electric SUV-type vehicle will increase sales sufficiently to make Tesla profitable is questionable at best. I suspect very few people are thinking: “If only someone would make an EV SUV, why, I’d be happy to plunk down whatever they’d ask!” The problem is not the configuration of the metal wrapped around the electric drivetrain, but the drivetrain itself. A larger, heavier vehicle will only exacerbate the range and lack of flexibility problems of all EVs.

If I were sitting in Musk’s seat, I would take an urgent look at cutting cost. Not just taking cost out of the car, but reducing expense in general. When they have a situation where, on an operating basis, they’re losing $4000 per car, they’re in trouble. At some point, they’re not going to get any more money.

I would seriously consider an entry-level model with a cheaper, range-extended hybrid driveline. Something with a much smaller battery that also looks great and drives great. Something that’s electric most of the time, say 50 or 60 miles, but can carry on under gasoline power past that. Would an internal-combustion engine dilute the Tesla brand? Maybe, but everyone said Porsche could never build a front-engine car, and look how that turned out.

Here, PM is getting to the core of the problem. In order for a small manufacturer like Tesla to be viable, they must sell vehicles that are far more expensive and offer exclusive features GM can’t, features for which consumers are willing to pay three and more times more than for a comparable GM vehicle. Tesla surely can’t make a profit in volume sales, nor does it have profitable models, like pickup trucks, that can offset its less profitable models.

GM has admitted that it loses money on every Volt it manufactures, though it has not been willing to explain precisely how much. Estimates have ranged as high as hundreds of thousands of dollars for each vehicle, but even if it loses only $50.00 per Volt, that’s not a remotely sustainable formula. If Tesla is losing only $4000 per vehicle—I suspect the number is much higher–that speaks for itself.

As I’ve said repeatedly, EV technology is simply not ready for prime time, and absent enormous and virtually unimaginable leaps in technology, it never will be. EVs just don’t have the economy, infrastructure and flexibility of even the least expensive conventional vehicles. While Tesla does offer generally greater range than other EVs, that factor alone is not enough, particularly when one could buy three or more well-equipped, high-mileage conventional vehicles for the price of a single Tesla.